An ownership feud over management of a largely vacant Midtown South property will be decided at auction in August. The 16-story prewar office building at 251 Park Avenue South, which sits nearly 70 percent vacant in the heart of the red hot submarket, is to be sold at public auction on August 28, by order of the Supreme Court of the State of New York.
The building is owned “tenancy in common”–a form of simultaneous ownership in a single property by two parties—by F.M. Ring Associates and an investor, reportedly Gary Barnett’s Extell Development.
The external investor, reported to be Extell, has consistently argued the building is badly managed, according to Joshua Stein, court appointed referee. As with any tenant-in-common, a partition of the property can be requested but since the single-structure property cannot divided, a sale of the property is dictated. In March, a state judge signed an order requiring the property go to auction.
It would not be the first time a property jointly owned by Mr. Barnett and the Ring family has gone to auction. In 2011, Mr. Barnett won 20 West 47th Street at a judicial sale for $73 million, according to The Real Deal. Prior to the auction the property had been owned 75 percent by Mr. Barnett, with the remaining 25 percent controlled by F.M. Ring Associates.
Bidding for 251 Park Avenue South, which begins at zero, is open to all parties, including current ownership. Early interest in the property has come from both hotel developers and traditional real estate investors, Mr. Stein noted.
“It’s a beautiful, classic old building with magnificent ceilings and unbelievable light,” Mr. Stein told The Commercial Observer. “You can’t buy it for the income; you buy it because you’re going to put capital into it. It’s a development play.”
Built in 1909, the property at 251 Park Avenue South was at one time a distribution center for woolens for the menswear industry. The top three floors of the building are occupied by a fabric design firm, while the ground floor retail space is occupied by Sovereign Bank. Floors two through 13 are vacant and space has recently been marketed at 7,500 rentable square feet per floor.
Mr. Barnett has previously clashed with his New York real estate colleagues, namely Bruce Ratner, whose Forest City Ratner Companies he outbid by $100 million for control of Atlantic Yards at the last minute, despite the fact Mr. Ratner had invested years of planning and millions of dollars in the development. The Atlantic Yards affair was just a few years after Mr. Barnett had tried block FCRC and The New York Times’ acquisition of land on Eighth Avenue for construction of the Grey Lady’s new headquarters. Mr. Barnett, who owned parking lot on the site, organized nearby landlords in an attempt to raise the Times’ bid.